[thechat] Hiding from Elections Now

Matt Warden mwarden at gmail.com
Mon Oct 27 14:21:28 CDT 2008


On Mon, Oct 27, 2008 at 2:00 PM, erik mattheis <zero at gozz.com> wrote:
> I think you're looking at things as either "this" (what you believe) or "not
> this" (the opposite of what you believe): just because one or half a dozen
> banks first sent applications through an address filter doesn't mean that no
> banks were willing to lend in the areas discriminated against by other banks
> - just that loans were less available and more expensive in those areas.
> There was never an untapped market on which you're in part basing your
> argument - er, disagreement, contrariness, whatever here.

That is precisely my point. Costs for loans in low and middle income
areas tend to be higher. The government decided this was wrong and
legislated against it.

> Similarly, looking at it as "increased risk" vs "no increased risk" is the
> wrong dichotomy to be thinking about. The banks who had to change their
> policies due to CRA saw their underwriting costs become more expensive. They
> were no more exposed tom risk than before - they just had to put more effort
> into approving or disapproving the loans they made.

That's possible, I guess. But I still think that's ignoring the real
reason that loans are less available in low and middle income areas to
begin with (to me the reason seems obvious). But, even if that wasn't
the case and it was simply a cost issue, government intervention still
pushed banks into loans that had higher costs, less profit margin, and
therefore more risk (even if the underlying loans had no higher risk
of default).

> Right, you asked for an examples of a predatory lending case were documents
> were falsified.

Yeah, I wanted to make sure I understood what you were referring to.

> Now your binomial this or that filter seems to be making you believe I'm
> claiming if it weren't for predatory lending we wouldn't have the glut of
> bad mortgages. Which isn't something I've expressed or implied. I mentioned
> predatory lending as part of a response to your misunderstanding that the
> CRA forced lenders to issue bad loans. There have been many contributing
> factors to the mortgage/housing situation.

Absolutely. Erik, I'm not really arguing with you. I'm discussing the
general arguments people make about why we ended up in this situation.
The blame put on "predatory lending" is overblown and I believe it's
because Congress is primarily driving the discussion and they do not
want to review how their government intervention may have contributed
to the situation. You defended some of these arguments Congress is
making, which is why we got into a bit of a back and forth, but my
goal really isn't to argue with you and try to convince you that I'm
right.

> What makes you claim there aren't people in prison for predatory lending?

I simply made the point if fraud has been occurring on such massive
scales, then the government hasn't been doing its job. For the
government to turn around and act surprised about this fraud and blame
our current problems on it is a little ridiculous. As you said, it's
not a new practice.


-- 
Matt Warden
Cincinnati, OH, USA
http://mattwarden.com


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